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Dollar Moves Higher
On Signs of Strength
In the U.S. Economy

The dollar moved higher, bolstered by signs of economic strength in two regional Federal Reserve reports and by traders exiting from positions that had been bullish on the Japanese yen.

Late yesterday in New York, the euro was trading at $1.2346, down from $1.2387 late Wednesday in New York. Against the yen, the common currency was at &yen;135.53 from &yen;135.17. The dollar was trading at &yen;109.79, up from &yen;109.13. The dollar was at 1.2384 Swiss francs, up from 1.2288, while sterling was trading at $1.8521 from $1.8563.

The market largely shrugged off data on inflation, industrial production, and jobless claims, all of which confirmed the dollar-bearish view that Federal Reserve policy makers aren't under big pressure to raise interest rates. Since that generally jibes with prevailing market views, the reaction to the data was light.

"Reaction to these numbers was very neutral and I think there's a feeling that markets are happy to have them out of the way," said Thomas Molloy, a trader at Bank Leumi in New York.

Investors took the biggest cues of the day from two regional reports that showed strength in some of the nation's key economic zones: Philadelphia and New York (through the Empire State survey). Additionally, the market was supported by stability in U.S. stocks even as they face several downbeat earnings reports and outlooks.

"It's not been a day of major flows or fundamental moves, but with both the Empire State and Philly indexes higher, and with stocks holding in, we're seeing some reminder that it's not all bad news for the economy," said Steven Englander, chief currency strategist at Barclays Capital in New York.

Against the yen, the dollar punched through resistance at &yen;109.60, though it failed to stay above the next resistance level of &yen;109.90.